Current lesson from 1880s

Projected low mintages of U.S. coinage for the year 2009 have captured the hobby’s attention.

That is a good thing. Circulating coinage used to be a base of hobby interest and that base has shriveled over the years despite the state quarter program.

Collectors of my generation and older who can remember what used to be in circulation tend to be dismissive about what is currently circulating.

The recession is changing that perception as the odd silver coin finds its way into fast food tills across America as cash strapped families scrape up everything they can to pay bills.

But what if this is only the beginning of the trend? What if 2009 is only the first of a long series of years with fairly low mintages of current circulating coins?

I ask the question because I was thinking about a possible parallel to the 1880s. That decade saw mintages fall dramatically. The Panic of 1873 began the process, but what really put the trend in place was the Resumption Act, which made 1879 a key year in American monetary history. It was in that year that the inflationary upset that was caused by the Civil War was finally pushed into history. Gold and silver coinage and paper money all became exchangeable at face value, something that had not been the case for almost 18 years.

Values had been expressed in gold coin and in greenbacks and gold was the preferred medium with the lower price. Or put another way, it took more dollars in paper to buy gold dollars. This phenomenon is familiar to present-day gold bugs.

In 1879, paper and gold prices converged at par. Then what happened?

Well, millions of coins that had been in hiding in Canada started coming back. This coin influx continued for a long time.

The result was the current coin demand was increasingly met by the returning coins and the annual Mint output fell.

That explains the 1880s.

What if current habits of digging out every coin you can find and returning them to circulation becomes permanent?

Combine this with the ongoing increasing use of debit and credit cards and we may be entering a prolonged period where demand for new coins could be low enough to make low mintages the standard pattern.

Wouldn’t it be great for the hobby if coins of recent years that could still be found in change had premiums attached to them?

Suddenly the incentive to fill a Whitman album would grow from simply completing a set and the satisfaction that brings to finding key dates worth real money.

That is almost enough to bring tears to the eyes of the veterans of the circulation finds era.